Cable Nets Drive Disney in 1Q

The Walt Disney Co. reported 5% earnings growth on 1% revenue growth in the first quarter of fiscal-year 2005, fueled primarily by strong gains at its cable networks.

Earnings for the period were $723 million, or about 35 cents per share, up from $688 million (33 cents) in the same period last year. Revenue, at $8.67 billion, was up 1%, as was operating income, at $1.29 billion compared with $1.27 billion in the year-ago quarter.

Media networks -- which include cable and broadcast networks -- reported revenue growth of 11% and operating-income growth of 36%. However, most of that increase came from its cable networks, such as ESPN and Disney Channel.

At the cable networks, revenue rose 16% to $1.8 billion and operating income was up 67% to $327 million, largely due to affiliate and advertising-revenue increases at its ESPN sports network and advertising-revenue increases at ABC Family.

In a conference call with analysts, Disney chief financial officer Thomas Staggs said the decrease in operating income at its ABC broadcast network was due mainly to increased costs at ABC News from presidential-election coverage.

He added that ABC did not reap the benefits of its two biggest hits -- Desperate Housewives and Lost -- in the fiscal first quarter because it sold advertising for the shows last year at lower prices when the network had much lower ratings.

Staggs said ABC should begin to reap higher advertising rates at the broadcast network later in the year, and it is on track to becoming profitable.